TUC: Share UK Economic Recovery With Angry Public Sector Workers by Ending Pay Rise Cap

The fruits of a strengthening economic recovery in the UK must be shared with public sector workers by ending their pay rise freeze, said the head of the Trades Union Congress.

Britain's economy is set to grow by around 3% in 2014, according to Bank of England forecasts, as every sector reports higher output and adds more jobs.

But the government says its austerity programme to restructure public finance and erase the structural deficit is far from over, with more spending cuts planned.

Part of this austerity had been a cap on public sector wage rises of 1%, after a period of frozen salaries, which is below price inflation and so amounts to a real-terms cut in pay for those working for the state.

"Whether they work in town halls, hospitals or central government departments, public servants everywhere are facing a huge squeeze on their incomes," said TUC General Secretary Frances O'Grady in a speech at Unite the Union's annual conference in Liverpool.

"Pay restraint was a bitter pill to swallow during the dark days of recession, but now the economy looks to be back on its feet, public sector workers are understandably angry that their pay continues to be held down.

"Pay rises way below the cost of living, coming hard on the heels of several years of pay freezes, have left family budgets stretched to the limit. Now, as economic pressures seem to be lifting, the government is still insisting on keeping public sector workers' pay down.

"The recovery remains some way off for our hard-working, dedicated midwives, nurses, teachers, dinner ladies and other public servants. For them several years more of financial worry and frugal living lie ahead."

The government inherited a budget deficit in public finances worth the equivalent of 11% of GDP. As a result, government borrowing to plug the gap between tax receipts and spending has pushed up the public debt pile to more than £1.2tn.

In order to close this gap, Chancellor George Osborne has slashed structural public spending, such as welfare payments and the central government grant to local authorities.

Instead of raising taxes too, Osborne has focused almost all of his austerity on spending cuts. This is so he could do things such as cut corporation tax and lift the personal allowance threshold to £10,000 to support the UK economic recovery.

His critics have said the post-financial crisis slump, which was worsened by the outbreak of the sovereign debt crisis across the eurozone, a key trading partner of the UK, is a reason to increase public spending to spur on economic growth, not slash it.

Once the economy has healed, they argue, it is time for fiscal restructuring, which will limit the effect on the poor and vulnerable who rely on the welfare payments and public services currently being cut.

But Osborne and the government say the deficit must be erased as soon as is possible to stop the debt pile spiralling even higher and ensure the UK can access the bond markets cheaply by retaining investor confidence in the integrity of its public finances.